The VCFI is the index created by the Port Authority of Valencia to reflect the evolution of the market rates for the export of full containers by sea from Valenciaport. VCFI stands for Valencia Containerised Freight Index. This index will serve shippers as a tool to predict the evolution of freight rates within their markets of interest, which is a key determinant of the cost of their export operations. On the other hand, it will also be useful for operators that offer such services, providing a benchmark for the evolution of their own freight rates and those on the market.

VCFI General

The Valencia Containerised Freight Index (VCFI) saw a slight drop in June, down -1.30% month on month, recording a value of 1,585.67 points and cumulative growth of 58.57% since the beginning of the series in 2018. During the last period under review, the sharpest declines were recorded in the United States and Canada, down 23.45%, followed by the Far East down 13.82%, and East Coast Africa down 6.11%. In contrast, the Middle East recorded an increase of 21.08%, the Far East was up 19.63%, and the Eastern Mediterranean grew by 15.37%.

Although geopolitical conflicts remain a reality and have a direct impact on the shipping market activity in terms of the evolution of the world economy according to the World Bank’s “Global Economic Prospects” report of June 2024, things are looking up. The global economy is stabilising after several years of overlapping negative shocks, despite geopolitical tensions and high interest rates. All told, overall growth is projected to remain stable at 2.6% in 2024.

Growth in international trade is expected to pick up in the coming years; however, it is projected to remain considerably below the average rates recorded in the two decades prior to the pandemic. Trade growth is forecast to reach 2.5% in 2024 and then 3.4% in 2025-26, marking a significant improvement in respect of 2023. This forecast implies an uptick in goods trade as inventory restocking resumes in developed economies and demand for goods from China stabilises, with services trade growth stabilising at close to a pre-pandemic pace.

Over recent weeks, there has been a marked increase in demand for container shipments. According to the latest reading of the RWI/ISL Container Throughput Index, we’ve seen a month-on-month growth in port traffic, with the seasonally adjusted index rising to 129.9 points, compared to 129.1 in the previous month. This increase in global container traffic is evidence of a further recovery in global trade in the second quarter, which should support the economic recovery in Europe in particular.

Indeed, the increase in traffic at European ports was the main contributing factor to this increase. The North Range Index, which indicates economic development in the Northern Eurozone and Germany, showed a significant increase from 110.4 points to 111.9 points. This suggests a continuation of the recovery in container traffic after a fall in the previous month. However, Chinese ports saw container throughput fall slightly from 143.2 points in the previous month to 142.9 points. This slight decrease contrasts with the increase observed in Europe.

Looking at factors affecting shipping supply, in the energy and commodities market, a slight increase in the average price per barrel of Brent crude oil was observed in June, reaching $82.25, compared to $81.75 in May, an increase of 0.98%. Meanwhile, in terms of marine fuels, the cost of bunkering at the world’s top 20 ports, as reported by Ship&Bunker, saw a slight decrease of 0.76% for VLSFO (Very Low Sulphur Fuel Oil), from $628.92 in May to $624.17 in June.

According to the data published by Alphaliner, the idle fleet has returned to levels similar to those seen at the time of the pandemic. In the first half of 2024, idle tonnage averaged 0.7 per cent of the total container shipping fleet, reflecting a situation reminiscent of that observed during the pandemic. Currently, only 77 vessels with a total of 217,038 TEU are commercially idle, as shipping lines have used all available capacity to maintain services. This figure has changed slightly from the previous survey, which counted 75 vessels and 216,914 TEUs. In terms of port congestion, analysis by the consultancy Linerlytica indicates that the situation has worsened significantly over recent months. Congestion now affects 8.4% of the total container fleet, representing a capacity of 2.51 million TEU. This increase of 8.4% compared to 6.8% in the previous reading is evidence of increasing pressure on trans-shipment ports worldwide. There is no doubt that the crisis in the Red Sea continues to exacerbate port congestion, especially in key ports such as Singapore. Drewry reports that Singapore has recorded a container density close to the levels seen during the height of the pandemic, as fewer vessels call, but the average number of trades increases. In addition, port productivity has declined dramatically, with a 43% increase in the time vessels spend at anchor, affecting operational efficiency and transit times

VCFI Western Mediterranean

Turning to the Western Mediterranean sub-index, a fall of -3.67% was recorded on the previous month. That took the VCFI for the Western Mediterranean to 1,838.17 points, for accumulated growth of 83.82% since the series began in 2018. As for Valenciaport, the most recent data indicate an increase in exports to Morocco, while there has been a notable drop in cargo to Tunisia. There has also been a slight increase in trade with Algeria.

VCFI Far East

The Far East saw a drop of -13.82%, reaching 2,032.45 points, with accumulated growth of 103.24% since the series began in January 2018. This decline is consistent with previous observations of falling container traffic in China, also reflecting poorer performance and demand in the region.